Revenue growth in 2004 seen as widespread across sectors
by Staff -- Manufacturing Business Technology, 7/1/2005 12:00:00 AM
An industry "report card" on 2004 manufacturing revenue growth confirms recovery was broadly spread across sectors, with some doing better than others.
Framingham, Mass.-based Manufacturing Insights reviewed 240 domestic and international companies in nine industries to evaluate to what extent they have grown without any sacrifice in profits, and the degree of variability among companies within each sector.
High-tech garnered an A+ for all segments, while base materials saw uneven growth. Oil and steel performed well, but pulp & paper dragged in overall sector performance.
"High-tech did so well perhaps because it was doing so poorly before," says Jay Holman, senior analyst of manufacturing metrics research, Manufacturing Insights, adding, "It had a modest base to grow from."
Semiconductor devices, electronics hardware, and contract manufacturing showed growth, with recovery led by consumer electronics (namely, Apple Computer) reporting almost 45 percent revenue growth, and net profit margins up from 2.1 percent in 2003 to 5.2 percent in 2004. iPods, MP3 players, and the like fueled that growth.
"There was a lot of pent-up demand for desktops on the business side," Holman says. "People had strung out how often they refresh their desktops. On the cost side, they did a lot of work the last few years building better relationships with contract manufacturers."
Growth in base materials industries, while impressive, was less uniform. Steel and oil saw rising demand, particularly in China, with Mittal Steel and US Steel cited as top performers, recording nearly 50 percent revenue growth and greater than a 10-percent increase in net profit margins. The sector performance wasn't uniform due to low scores in pulp & paper. Yet overall, the sector showed above-average growth, earning an A-.
"Aerospace and defense looked better than we would have suspected," points out Bob Parker, VP of research, Manufacturing Insights. "No one's net profit margin went down for the year." Increased government spending on defense contributed to uniform growth, though profit margins remained relatively flat. Embraer led the sector, with more than 60 percent revenue growth in 2004 over 2003. As a whole, sector performance received a grade A.
"Manufacturing had a very good year in 2004 overall," concludes Parker. "It is encouraging that both financial performance and productivity numbers are strong. It bodes well for the importance of manufacturing generating value on a global scale."
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